For Starters #31: What Do You Save by Admitting Defeat Even Faster?
“Don’t find customers for your product. Find products for your customers.” – Seth Godin
“We’ll give you software you don’t want in 30 days or less” - The original joke about the benefits of agile software development.
A decade ago, a client hires me to build an initial version of an app. Together we do so - in just a few weeks. At that point, I ask them for a list of initial users to preemptively create user accounts. They provide a couple dozen names and email. Perfect. Then, we notify these initial users to try out this new app, and….
Nothing. No usage, no bug reports, not a single sign in, not even a password reset request.
No one was even interested enough to kick the tires.
I waited a couple days just to make sure then, I invited my client for lunch to break the awkward news in person.
I have a vague memory of them walking out before the tab came.
A couple days later, they called to say, “Thank you. As the vendor, you had all the incentive to recommend we double down and keep going, keep spending money, but you didn’t. You recommended stopping, based on lack of customer interest. It was hard to hear. But it was the right call.”
We’ve been friends ever since.
One of my favorite questions to ask founders as they shut down their venture was, “Looking back, when did you get the first sign that you should stop?”
The answer was consistently half way through the venture.
Always makes me wonder, what could they have gained if they boldly stopped right then and there?
A few weeks is pretty quick to determine there’s no demand and stop, but it’s still pretty wasteful - if only because a product was built no one will ever see or use.
What would have been saved if this definitive absense of customer interest was confirmed even faster?
Lots.
Not just in actual dollars, but in opportunity cost - continuing to spend time on a bad idea keeps you from spending that time on an substantially better idea - even if you don’t yet know what that better idea is.
Enthusiastic customers pull the best products out of you.
In the decade since this story, I’ve worked with more than 100 entrepreneurs in a multitude of contexts. This story of putting off engaging with customers until the product is “ready” is the most common story I hear. As is the resulting customer disinterest. Even those entrepreneurs pursuing customer demand pre-product all too often interpret a polite head-nod as enthusiastic demand.
Today, it’s completely possible to accurately assess customer disinterest in less than a week. Without writing a single line of code and without a product. You have all the tools to do this right now.
Get in front of your target customer to talk about what frustrates them.
Listen for where they ask for help.
Offer to help.
Decide on a price.
They still might say No. Or, they might excitedly engage you (first customer! woooooot!)
It doesn’t matter which, for at this stage - nothing’s been invested. We’re just identifying clear and obvious demand. The adjective I use with first-time entrepreneurs is ‘clamoring’. Anything less than clamoring demand is a ’No’ and we need to stop. Immediately.
Clamoring is a clear ask for help on the first conversation.
Yes, this can be accomplished in a week. Of course, just to be sure, we could do another round in week 2.
It’s not just that focusing on clamoring demand helps ensure profitability and sustainability when bootstrapping, even early stage investors are looking for a business that’s wildly successful despite itself. Yes, this means a business where demand is steadily growing despite the founding team’s continued unforced errors. This makes the job of the investors much easier - all they need to do is install a competent operating team and let the $$$$ flow.
In the corporate world, every new product is a multi-million dollar commitment fighting for relevance against incremental sales of established product lines - the opportunity cost is even higher. The urgency to get to “hell yea, or no” is even more pressing. Without a strong, steady, strategic hand even a compelling new product line will get nixed because it didn’t positively contribute to the P&L in under 36 months. This is why M&A is a more popular corporate development strategy - especially for the largest firms: demand has already been proven, the contribution to the bottom line is immediate.
Which brings me back to the Seth Godin quote at the top.
Too often I see entrepreneurs with no connection to, or domain knowledge of, a given customer community asserting how much the community needs their “solution”. This is such a difficult path for everyone.
So difficult, I recommend instead starting with a community you’re already a part of. We’re all a part of so many communities, we sometimes forget how many.
Alternatively, join a community everywhere it exists - online, in-person, everywhere and for the next 6 months just listen and contribute - without selling or even brainstorming potential offerings.
I suspect you’ll find a business idea your new friends will clamor for.